I am an entrepreneur and communications expert from Salt Lake City and founder of SnappConner PR. I am the author of Beyond PR: Communicate Like A Champ The Digital Age, available on Amazon. I am also a frequent author and speaker on communication and am co-creator of the Content University program for executives. The opinions I express (especially when tongue in cheek) are entirely my own. My newsletter is the Snappington Post, available at http://bit.ly/1iv67Wk

Sky Zone is a Los Angeles company that opened its first site in Las Vegas in 2004 and now boasts 27 sites—3 company owned and 24 franchise locations. The company patented its idea carefully and has been highly successful, bringing in $15.8 million dollars last year. However, as the concept has grown in popularity, Sky Zone has faced an array of imitators trying to steal their idea. The struggle of defending its patent is taking a sizeable toll.

In fact, the company notes a particular park has been taking Sky Zone ideas—such as trampoline workout classes and dodgeball courts—and has copied the programs precisely, one by one, and simply slightly altered their names. What can they do?

“Recently I wrote a piece comparing the value of patents for small companies to owning a used car—you might get a lemon, you’ll probably pay too much, etc.,” he said. “While I intended it as a cautionary piece to help guide small business owners in how they pursue patent protection, I touched only briefly on a problem that is all the more important because it can’t be avoided no matter how carefully you plan: enforcement of your intellectual property rights.”

Hanging a patent on your wall looks great, Nick says, but formal intellectual property rights, for all the expense and trouble of getting them, are only as good as your ability to enforce them against infringers. And that is where the problems arise.

Nicholas Wells, IP Attorney, Wells IP Law, Salt Lake City

For example, a trademark infringement suit often requires a formal survey of consumers. But this is not your friend with a clipboard at the mall. You’ll need an “expert witness.” Plan on $50,000-$80,000 just for the survey if you want it to stand up in court, Nick reports. Total cost of the trademark infringement lawsuit? If you want to win, he says to figure on $150,000 and two years of your life. And patents are virtually impossible for a small business to enforce. Most patent litigators worth their salt won’t touch a case for less than $250,000 and they will tell you to plan on twice that amount. Nick also says you shouldn’t expect an attorney will take a case like this on contingency—the expenses that the lawyer would have to bear make this a very rare occurrence.

The economics of lawyers at $350-$900 per hour (depending on where you live), expert witnesses at near the same rate, and the rough and tumble world of American litigation seem to ensure that the costs rise each year.

Says Nick, “I can’t even recall how many business owners I’ve counseled about IP enforcement only to have them shake their heads and decide they have no recourse at all.”

He notes that an area of IP where the issue is highly evident is business method patents. These patents generally describe a set of business procedures that are novel and that give the inventor a competitive advantage. But they are difficult to get and even harder to enforce than “normal” patents for physical products like garage door openers, industrial valves, and microchips.

“I see three important issues that a business faces when it has a business method patent that it believes another company is infringing,” he says.

First, the legal issue: What is really protectable under the patent? Only the text of the claims in an issued patent can be enforced in court. Some parts of what the business owner intended to protect may not have made it through the patent prosecution process; those parts are free for the public to use unless they are protected in other ways, such as by trade dress or trademark protection.

Second, this situation presents an interesting ethics issue: Most people “feel” like they are stealing if they use another company’s patented widget (as long as they know about the patent), Nick says. But he notes that people are less likely to regard business methods as a valid subject of patent protection. Their gut reaction is often “they don’t have a monopoly on the idea,” although in fact a patent does give a monopoly on an idea, to the extent of the claims in the issued patent. But this difference in public reaction—which Nick believes is held in good faith, although it’s contrary to the law—leads others to infringe business method patents more frequently, so that the owners of those patents more frequently face the enforcement dilemma noted above.

Nick’s biggest point: A legal system that creates so-called legal rights that are virtually enforceable for many owners is a public policy issue crying out for a solution.

Some of these problematic IP enforcement matters are between two small companies, one having invested in IP protection, the other counting on the huge expense to keep the IP owner from enforcing its rights. Other times it has a David versus Goliath feel: A larger company that can foot the legal bills uses the court system to keep a smaller competitor down. This can be the case both defensively, where a small company is being sued by a larger company, he notes, or offensively, when a small IP owner is unable to assert its rights against a larger company.

For instance, Nick notes a great defensive example occurred when ClearPlay was sued by Hollywood studios a few years ago. ClearPlaydeveloped a novel technology that edits movies for content as they play on your home DVD player. The major movie studios claimed copyright infringement. But it turned out that ClearPlay had friends in the right places—Congress amended the Copyright Act to clarify that ClearPlay was not infringing. That’s a great result if you can manage it, he says, but most of us can’t.

The more typically outcome would have ClearPlay driven into bankruptcy by legal fees so that no one would have the option of using its product.

Nick notes anecdotally that there are many, many small businesses killed by IP infringements they were unable to fight. So what can be done?

“The immediate answer,” Nick says, “Is that small businesses should plan ahead and should invest in an IP strategy, rather than just throwing money at a registration or two. Review with an intellectual property attorney how likely infringement may be and how a combination of patents, trademarks, trade dress, copyright, and trade secret protection might stave off trouble. And don’t neglect the impact of marketing and public relations, both to reduce the profitability of infringement and to shame infringers if they appear (but watch out for defamation claims).”

Nick notes that a longer term solution suggested itself earlier this year when England set up a kind of “small claims” court for businesses with intellectual property disputes. Solicitor friends report that a small business can get a court injunction against a trademark infringer through this court process for around $3000 in legal fees and court costs. There are reasons not to divide the justice system into pieces like this, of course, but the English solution suggests one innovative way of approaching this difficult and ongoing problem U.S. businesses face.

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